Pfizer (PFE) Q1 2018 earnings summary

Executive summary

• Q1 revenue was $12.906B, up 1% YoY; reported diluted EPS rose 15% to $0.59 and adjusted diluted EPS rose 12% to $0.77.

• Innovative Health growth was offset by Essential Health declines, including sterile-injectable shortages, generic competition and product LOEs.

Financial highlights

• Revenue increased $127M YoY; favorable FX added $430M, or 3%, partly offset by a $302M, or 2%, operational decline.

• Reported net income rose 14% to $3.561B; adjusted income increased 11% to $4.668B.

• Reported diluted EPS was $0.59 versus $0.51; adjusted diluted EPS was $0.77 versus $0.69.

• Operating cash flow was $1.983B versus $1.584B; investing cash flow was $9.667B and financing cash outflow was $10.720B.

Outlook and guidance

• 2018 guidance reaffirmed: revenue $53.5B–$55.5B; adjusted diluted EPS $2.90–$3.00; adjusted tax rate ~17%.

• Guidance assumes a $2.0B revenue impact from recent and expected generic and biosimilar competition, and no U.S. Lyrica generic entry until June 2019, contingent on pediatric exclusivity.

• Guidance includes FX benefits of $1.3B to revenue and $0.09 to adjusted EPS versus 2017 rates; it assumes ~6.0B diluted shares and ~$6.1B of 2018 repurchases.

• Adjusted cost of sales guidance is 20.5%–21.5% of revenue; adjusted SI&A $14.0B–$15.0B; adjusted R&D $7.4B–$7.9B. Consumer Healthcare strategic options remained under review.