Pfizer (PFE) Q3 2018 earnings summary

Executive summary

• Q3 revenue was $13.298B, up 1% reported and 2% operationally; reported diluted EPS was $0.69 and adjusted diluted EPS was $0.78.

• Key-brand, biosimilar and emerging-market growth was partly offset by product LOEs, established-product declines and sterile-injectable shortages.

• FY18 revenue guidance narrowed while the adjusted EPS midpoint remained unchanged; sustained growth is expected after the Lyrica LOE impact in 2019–20.

Financial highlights

• Q3 reported net income rose 45% to $4.114B; diluted EPS was $0.69 versus $0.47 a year earlier.

• Adjusted income increased 15% to $4.661B and adjusted diluted EPS rose 16% to $0.78 from $0.67.

• Nine-month revenue rose 2% to $39.670B; reported net income increased 28% to $11.546B and adjusted diluted EPS was $2.36 versus $2.03.

• Q3 FX reduced revenue by $113M (1%) and added an estimated $0.01 to adjusted diluted EPS YoY.

Outlook and guidance

• FY18 revenue guidance narrowed to $53.0B–$53.7B from $53.0B–$55.0B, with the midpoint reduced by $650M, mainly due to Essential Health weakness and FX.

• Adjusted diluted EPS guidance narrowed to $2.98–$3.02 from $2.95–$3.05; midpoint unchanged, implying 13% YoY growth.

• Guidance: adjusted cost of sales 20.8%–21.3% of revenue, SI&A $14.0B–$14.5B, R&D $7.7B–$8.1B, other income ~$1.3B and adjusted tax rate ~16%.

• Guidance reflects a $1.8B expected revenue impact from generic and biosimilar competition and assumes no U.S. Lyrica generic entry before June 2019, contingent on pediatric-exclusivity extension.

• Three businesses were planned for FY19; Consumer Healthcare strategic alternatives were under review, with a decision expected in Q4 2018.