Pfizer (PFE) Q3 2017 earnings summary

Executive summary

• Q3 revenue was $13.168B, up 1% reported; operational growth was $178M, or 4% excluding HIS in both periods and unfavorable FX.

• Reported diluted EPS was $0.47 vs. $0.22; adjusted diluted EPS was $0.67 vs. $0.61, up 10%.

• Innovative Health growth and biosimilars were offset by Essential Health declines, product LOEs and legacy Hospira supply constraints.

Financial highlights

• Q3 revenue was $13.168B vs. $13.045B; reported net income was $2.840B vs. $1.355B.

• Adjusted income was $4.059B vs. $3.761B; adjusted diluted EPS was $0.67 vs. $0.61.

• Nine-month revenue was $38.843B vs. $39.196B; reported net income was $9.034B vs. $6.440B, and adjusted income was $12.313B vs. $11.867B.

• FX reduced Q3 revenue by $54M and adjusted diluted EPS by $0.01 YoY.

• Reported results benefited from nonrecurrence of the prior-year HIS remeasurement loss, higher gross margins and lower restructuring costs.

Outlook and guidance

• FY17 revenue guidance narrowed to $52.4B–$53.1B; adjusted diluted EPS guidance rose $0.03 at the midpoint to $2.58–$2.62, or $2.60 midpoint and 8% YoY growth.

• Guidance includes a $2.3B revenue impact from recent and expected generic and biosimilar competition, plus $0.1B revenue and $0.01 adjusted EPS FX headwinds.

• Expected LOE impacts: ~$2B annually through 2020, ~$1B in 2021 and <$500M annually in 2022–2025.

• New cost-reduction initiatives target ~$1.3B savings by 2020; Hospira integration savings target $1.0B annually by 2018, with ~$700M achieved by Oct. 1, 2017.