NEW YORK--(BUSINESS WIRE)-- Pfizer Inc. (NYSE: PFE) reported strong financial results for second-quarter 2022 and updated certain components of 2022 financial guidance(4). Pfizer reaffirmed its previous 2022 revenue guidance, despite unfavorable impacts from foreign exchange, while reaffirming its revenue guidance for Comirnaty(1), the Pfizer-BioNTech SE (BioNTech) COVID-19 vaccine, and for Paxlovid, its oral COVID-19 treatment.
The second-quarter 2022 earnings presentation and accompanying prepared remarks from management as well as the quarterly update to Pfizer’s R&D pipeline can be found at www.pfizer.com.
Dr. Albert Bourla, Chairman and Chief Executive Officer, stated: “In multiple meaningful ways, we made significant progress this quarter on our strategies to bring value to our patients and shareholders, while also making commitments to prioritize the broader needs of the world, including those of the environment and our most vulnerable populations. For example, we set an ambitious goal for ourselves to achieve the Net-Zero Standard for greenhouse gas emissions by 2040, ten years ahead of the timeline described in the standard. We also launched an initiative to help bring all of our current and future patented medicines and vaccines to the 1.2 billion people living in 45 lower-income countries around the world at not-for-profit prices, a first in the industry.”
Dr. Bourla continued: “Even while launching these initiatives to support a healthier, more equitable world, we remain equally committed to strong financial execution on behalf of our shareholders. In the second quarter, we recorded the largest amount of quarterly sales in our history. We also presented potentially best-in-class data for etrasimod and announced the proposed strategic acquisition of Biohaven, both of which are closely tied to our purpose: Breakthroughs that change patients’ lives.”
David Denton, Chief Financial Officer and Executive Vice President, stated: “I am very pleased with the performance of our business this quarter, with strong operational revenue and earnings growth driven by multiple therapeutic areas across the company, and our COVID-19 franchises continuing to serve patients in need while also propelling us to an all-time high in quarterly sales. We continue to prioritize high-value uses for our capital, with an emphasis on reinvesting in our business by funding both internally and externally developed science and innovation while also continuing to grow our dividend and buy back shares, when appropriate, to help offset dilution. I am confident that Pfizer is well-positioned to continue to deliver exceptional value for our patients and shareholders going forward.”
Results for the second quarter and the first six months of 2022 and 2021(5) are summarized below.
Beginning in the first quarter of 2022, Adjusted(3) financial measures include expenses for all acquired in-process research and development (IPR&D) costs incurred in connection with upfront and milestone payments on collaboration and in-license agreements, including premiums on equity securities, as well as asset acquisitions of acquired IPR&D and are reported as a separate income statement line item. Previously, these costs were recorded within the R&D expenses line item and certain of these costs were excluded from Adjusted(3) results. The change to include all acquired IPR&D expenses within Adjusted(3) results had no impact on Adjusted(3) diluted EPS in second-quarter 2022 and negatively impacted Adjusted(3) diluted EPS by $0.03 in second-quarter 2021.
Also in the first quarter of 2022, Pfizer implemented a change in policy to exclude all amortization of intangibles from Adjusted(3) income, which favorably impacted Adjusted(3) diluted EPS by $0.02 in second-quarter 2022 and by $0.03 in second-quarter 2021.
Prior period amounts have been revised to conform to the current period presentation for both amortization of intangibles and acquired IPR&D.
Business development activities(6) completed in 2021 and 2022(5) impacted financial results in the periods presented. Some amounts in this press release may not add due to rounding. All percentages have been calculated using unrounded amounts. References to operational variances pertain to period-over-period changes that exclude the impact of foreign exchange rates(7).
Pfizer raised its 2022 financial guidance, on an operational basis(7), for revenues and Adjusted diluted EPS(3) by approximately $2 billion and $0.24, respectively. After including the expected incremental unfavorable impacts of changes in foreign exchange rates since last quarter’s earnings report, the guidance range for revenues remains unchanged and the bottom end of the guidance range for Adjusted diluted EPS(3) was increased by $0.05.
Operational Growth(7) vs. Prior Year
Operational Growth(7) vs. Prior Year
The midpoint of the guidance range for revenues reflects a 29% operational increase compared to 2021 revenues of $81.3 billion. This guidance includes the following assumptions related to Pfizer’s COVID-19-related products:
The midpoint of the guidance range for Adjusted diluted EPS(3) reflects a 65% operational increase over the 2021 Adjusted diluted EPS(3) of $4.06, which has been revised from its original presentation to exclude all amortization of intangibles and to include the impact of all acquired IPR&D expenses.
Financial guidance for Adjusted diluted EPS(3) is calculated using approximately 5.75 billion weighted average shares outstanding, and assumes no additional share repurchases in 2022. The expected increase in weighted average shares outstanding compared to 2021 of approximately 50 million shares has an unfavorable impact on 2022 Adjusted diluted EPS(3) of $0.03 at the midpoint of the guidance range.
Other components of Pfizer’s 2022 financial guidance, all of which are presented with the expected impacts from changes in foreign exchange rates included, are presented below.
Adjusted(3) Cost of Sales as a Percentage of Revenues
Adjusted(3) SI&A Expenses
Adjusted(3) R&D Expenses
Acquired IPR&D Expenses(4)
Effective Tax Rate on Adjusted(3) Income
Guidance for Adjusted(3) SI&A expenses was decreased by $300 million compared to the previous guidance range, primarily reflecting lower expected selling expenses for certain products and geographies, as well as a decline in deferred compensation savings plan expenses, which are tied to market performance.
The midpoint of the guidance range for Adjusted(3) R&D expenses was increased by $250 million compared to the previous guidance, primarily as a result of planned incremental investments in mRNA vaccine programs outside of COVID-19 as well as various other projects.
Guidance for the effective tax rate on Adjusted(3) income was lowered by 0.5 percentage points compared to the previous guidance, reflecting favorability in the jurisdictional mix of earnings, settlements of global tax examinations and the expiration of local statutes of limitations, among other drivers.
During the first six months of 2022, Pfizer deployed its capital in a variety of ways, which primarily include the following two broad categories:
In addition to the capital investments listed above, in the first six months of 2022, Pfizer announced the acquisitions of ReViral Ltd. (ReViral), which closed in the international third quarter of 2022, and Biohaven Pharmaceutical Holding Company Ltd. (Biohaven), which, upon completion, will require upfront capital investments totaling approximately $13.3 billion.
As of July 28, 2022, Pfizer’s remaining share repurchase authorization is $3.3 billion. Current financial guidance does not anticipate any additional share repurchases in 2022.
Second-quarter 2022 diluted weighted-average shares outstanding used to calculate Reported(2) and Adjusted(3) diluted EPS was 5,712 million shares, an increase of 35 million shares, primarily due to shares issued for employee compensation programs, partially offset by the impact of shares repurchased in first-quarter 2022, which resulted in a $0.01 reduction to Reported(2) and Adjusted(3) diluted EPS compared to the prior-year quarter.
QUARTERLY FINANCIAL HIGHLIGHTS (Second-Quarter 2022 vs. Second-Quarter 2021)
Second-quarter 2022 revenues totaled $27.7 billion, an increase of $8.8 billion, or 47%, compared to the prior-year quarter, reflecting operational growth of $10.1 billion, or 53%, as well as an unfavorable impact of foreign exchange of $1.3 billion, or 7%. Excluding growth from Paxlovid and Comirnaty(1), company revenues grew $128 million, or 1%, operationally.
Second-quarter 2022 operational growth was primarily driven by:
partially offset primarily by lower revenues for:
GAAP Reported(2) Income Statement Highlights
SELECTED REPORTED COSTS AND EXPENSES(2)
Acquired IPR&D Expenses(2)
Effective Tax Rate on Reported Income(2)
Second-quarter 2022 Cost of Sales(2) as a percentage of revenues decreased 5.8 percentage points compared with the prior-year quarter. The drivers for the decrease include, among other things:
SI&A Expenses(2) increased 7% operationally in second-quarter 2022 compared with the prior-year quarter, primarily reflecting higher investments for Paxlovid and Comirnaty and a higher provision for healthcare reform fees based on sales of Paxlovid and Comirnaty, partially offset by a decrease in deferred compensation savings plan expenses.
Second-quarter 2022 R&D Expenses(2) increased 27% operationally compared with the prior-year quarter, primarily driven by increased investments across multiple late-stage clinical programs, including development costs and at-risk manufacturing for programs to prevent and treat COVID-19, as well as costs to develop recently acquired assets.
Acquired IPR&D Expenses(2) decreased 100% operationally in second-quarter 2022 compared with the prior-year quarter, primarily reflecting the acquisition of Amplyx Pharmaceuticals, Inc. in second-quarter 2021, and no transactions giving rise to acquired IPR&D expenses in second-quarter 2022.
Pfizer recorded $772 million of other deductions––net(2) in second-quarter 2022 compared with $1.3 billion of other income––net(2) in second-quarter 2021. The period-over-period change was primarily driven by:
Pfizer’s effective tax rate on Reported income(2) for second-quarter 2022 decreased compared to the prior-year quarter primarily due to a favorable change in the jurisdictional mix of earnings.
SELECTED ADJUSTED(3) COSTS AND EXPENSES
Adjusted(3) SI&A Expenses
Adjusted(3) R&D Expenses
Adjusted(3) Other (Income)/Deductions––net
Effective Tax Rate on Adjusted Income(3)
Reconciliations of certain Reported(2) to Adjusted(3) financial measures and associated footnotes can be found in the financial tables section of the press release located at the hyperlink below.
RECENT NOTABLE DEVELOPMENTS (Since May 3, 2022)
A comprehensive update of Pfizer’s development pipeline was published today and is now available at www.pfizer.com/science/drug-product-pipeline. It includes an overview of Pfizer’s research and a list of compounds in development with targeted indication and phase of development, as well as mechanism of action for some candidates in Phase 1 and all candidates from Phase 2 through registration.
Please find Pfizer’s press release and associated financial tables, including reconciliations of certain GAAP reported to non-GAAP adjusted information, at the following hyperlink:
https://investors.pfizer.com/Q2-2022-PFE-Earnings-Release/
(Note: If clicking on the above link does not open up a new web page, you may need to cut and paste the above URL into your browser's address bar.)
For additional details, see the attached financial schedules, product revenue tables attached to the press release located at the hyperlink referred to above and the attached disclosure notice.
Comirnaty includes direct sales and alliance revenues related to sales of the Pfizer-BioNTech SE (BioNTech) COVID-19 vaccine, which are recorded within Pfizer’s Vaccines therapeutic area. It does not include revenues for certain Comirnaty-related manufacturing activities performed on behalf of BioNTech, which are included in the Pfizer CentreOne contract development and manufacturing organization. Revenues related to these manufacturing activities totaled $55 million and $101 million for second-quarter and the first six months of 2022, respectively, and $87 million for both second-quarter and the first six months of 2021.
Revenues is defined as revenues in accordance with U.S. generally accepted accounting principles (GAAP). Reported net income and its components are defined as net income attributable to Pfizer Inc. and its components in accordance with U.S. GAAP. Reported diluted earnings per share (EPS) is defined as diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. GAAP.
Adjusted income and Adjusted diluted EPS are defined as U.S. GAAP net income attributable to Pfizer Inc. common shareholders and reported EPS attributable to Pfizer Inc. common shareholders—diluted before the impact of amortization of intangible assets, certain acquisition-related items, discontinued operations and certain significant items. See the accompanying reconciliations of certain GAAP Reported to Non-GAAP Adjusted information for the second quarter and the first six months of 2022 and 2021. Adjusted income and its components and Adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS(2). See the Non-GAAP Financial Measure: Adjusted Income sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Pfizer’s 2021 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarterly period ended April 3, 2022 and the accompanying Non-GAAP Financial Measure: Adjusted Income section of this press release for a definition of each component of Adjusted income as well as other relevant information.
Pfizer does not provide guidance for GAAP Reported financial measures (other than revenues and acquired IPR&D expenses) or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP Reported financial measures on a forward-looking basis because it is unable to predict with reasonable certainty the ultimate outcome of pending litigation, unusual gains and losses, certain acquisition-related expenses, gains and losses from equity securities, actuarial gains and losses from pension and postretirement plan remeasurements and potential future asset impairments without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP Reported results for the guidance period.
Financial guidance for full-year 2022 reflects the following:
Pfizer’s fiscal year-end for international subsidiaries is November 30 while Pfizer’s fiscal year-end for U.S. subsidiaries is December 31. Therefore, Pfizer’s second quarter and first six months for U.S. subsidiaries reflects the three and six months ended on July 3, 2022 and July 4, 2021, while Pfizer’s second quarter and first six months for subsidiaries operating outside the U.S. reflects the three and six months ended on May 29, 2022 and May 30, 2021.
The following business development activity, among others, impacted financial results for the current or prior fiscal year:
References to operational variances in this press release pertain to period-over-period changes that exclude the impact of foreign exchange rates. Although exchange rate changes are part of Pfizer’s business, they are not within Pfizer’s control and since they can mask positive or negative trends in the business, Pfizer believes presenting operational variances excluding these foreign exchange changes provides useful information to evaluate Pfizer’s results.
Paxlovid and emergency uses of the Pfizer-BioNTech COVID-19 Vaccine have not been approved or licensed by the FDA. Emergency uses of Comirnaty have been authorized by the FDA, under an Emergency Use Authorization (EUA) to prevent Coronavirus Disease 2019 (COVID-19) in individuals 6 months of age and older. Comirnaty is licensed by the FDA for individuals 12 years of age and older. In addition, Comirnaty is under EUA for individuals 6 months of age and older, a third dose for certain immunocompromised individuals 5 years of age and older, a booster dose for individuals 5 years of age and older, and a second booster dose for individuals 50 years of age and older and for certain immunocompromised individuals 12 years of age and older. Paxlovid has been authorized for emergency use by the FDA under an EUA, for the treatment of mild-to-moderate COVID-19 in adults and pediatric patients (12 years of age and older weighing at least 40 kg [88 lbs]) with positive results of direct SARS-CoV-2 viral testing, and who are at high-risk for progression to severe COVID-19, including hospitalization or death. The emergency uses are only authorized for the duration of the declaration that circumstances exist justifying the authorization of emergency use of the medical product under Section 564(b)(1) of the FD&C Act unless the declaration is terminated or authorization revoked sooner. Please see the EUA Fact Sheets at www.cvdvaccine-us.com and www.covid19oralrx.com.
Monjuvi® is a registered trademark of MorphoSys AG.
DISCLOSURE NOTICE: Except where otherwise noted, the information contained in this earnings release and the related attachments is as of July 28, 2022. We assume no obligation to update any forward-looking statements contained in this earnings release and the related attachments as a result of new information or future events or developments.
This earnings release and the related attachments contain forward-looking statements about, among other topics, our anticipated operating and financial performance; reorganizations; business plans, strategy and prospects; our Environmental, Social and Governance (ESG) priorities and goals; expectations for our product pipeline, in-line products and product candidates, including anticipated regulatory submissions, data read-outs, study starts, approvals, clinical trial results and other developing data, revenue contribution, growth, performance, timing of exclusivity and potential benefits; strategic reviews; capital allocation objectives; dividends and share repurchases; plans for and prospects of our acquisitions, dispositions and other business development activities, and our ability to successfully capitalize on these opportunities; manufacturing and product supply; our efforts to respond to COVID-19, including the Pfizer-BioNTech COVID-19 vaccine (Comirnaty) and our oral COVID-19 treatment (Paxlovid); and our expectations regarding the impact of COVID-19 on our business, operations and financial results that involve substantial risks and uncertainties. You can identify these statements by the fact that they use future dates or use words such as “will,” “may,” “could,” “likely,” “ongoing,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “assume,” “target,” “forecast,” “guidance,” “goal,” “objective,” “aim,” “seek,” “potential,” “hope” and other words and terms of similar meaning.
Among the factors that could cause actual results to differ materially from past results and future plans and projected future results are the following:
Risks Related to Our Business, Industry and Operations, and Business Development:
Risks Related to Government Regulation and Legal Proceedings:
Risks Related to Intellectual Property, Technology and Security:
We cannot guarantee that any forward-looking statement will be realized. Should known or unknown risks or uncertainties materialize or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. Investors are cautioned not to put undue reliance on forward-looking statements. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in our subsequent report on Form 10-Q, in each case including in the sections thereof captioned “Forward-Looking Information and Factors That May Affect Future Results” and “Item 1A. Risk Factors,” and in our subsequent reports on Form 8-K.
This earnings release may include discussion of certain clinical studies relating to various in-line products and/or product candidates. These studies typically are part of a larger body of clinical data relating to such products or product candidates, and the discussion herein should be considered in the context of the larger body of data. In addition, clinical trial data are subject to differing interpretations, and, even when we view data as sufficient to support the safety and/or effectiveness of a product candidate or a new indication for an in-line product, regulatory authorities may not share our views and may require additional data or may deny approval altogether.
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