This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. The forward-looking statements are contained principally in this section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors." Words such as "expect," "anticipate," "target," "goal," "project," "hope," "intend," "plan," "believe," "seek," "estimate," "continue," "may," "could," "should," "might," and variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements other than statements of historical fact are forward-looking statements, including statements regarding overall trends, operating cost and revenue trends, liquidity and capital needs, collaboration and licensing arrangements, ongoing litigation and investigation matters, statements regarding the anticipated future impact on our business of the ongoing coronavirus disease 2019 ("COVID-19") and related public health measures, statements regarding the development, manufacturing and distribution of Veklury as a treatment for COVID-19 and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar expressions. We have based these forward-looking statements on our current expectations about future events. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materially from those suggested by these forward-looking statements for various reasons, including those identified below under Risk Factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof unless otherwise specified. Except as required under federal securities laws and the rules and regulations of theSecurities and Exchange Commission , we do not undertake and specifically decline any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise. In evaluating our business, you should carefully consider the risks described in the section entitled Risk Factors under Part I, Item 1A of our Annual Report on Form 10-K for the year endedDecember 31, 2020 and this Quarterly Report on Form 10-Q Part II, Item 1A in addition to the other information in this Quarterly Report on Form 10-Q. Any of the risks contained herein could materially and adversely affect our business, results of operations and financial condition. You should read the following management's discussion and analysis of our financial condition and results of operations in conjunction with our audited Consolidated Financial Statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended December 31, 2020 and our unaudited Condensed Consolidated Financial Statements for the three months endedMarch 31, 2021 and other disclosures (including the disclosures under Part II, Item 1A, "Risk Factors") included in this Quarterly Report on Form 10-Q. Our Condensed Consolidated Financial Statements have been prepared in accordance withU.S. generally accepted accounting principles and are presented inU.S. dollars. MANAGEMENT OVERVIEWGilead Sciences, Inc. ("Gilead", "we", "our" or "us") 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. We are committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis and cancer. We operate in more than 35 countries worldwide, with headquarters inFoster City, California . Our portfolio of marketed products includes AmBisome®, Atripla®, Biktarvy®, Cayston®, Complera®/Eviplera®, Descovy®, Descovy for PrEP®, Emtriva®, Epclusa®, Genvoya®, Harvoni®, Hepcludex® (Bulevirtide), Hepsera®, Jyseleca®, Letairis®, Odefsey®, Ranexa®, Sovaldi®, Stribild®, Tecartus®, Trodelvy®, Truvada®, Truvada for PrEP®, Tybost®, Veklury®, Vemlidy®, Viread®, Vosevi®, Yescarta® and Zydelig®. The approval status of Hepcludex and Jyseleca vary worldwide, and Hepcludex and Jyseleca are not approved inthe United States . We also sell and distribute authorized generic versions of Epclusa and Harvoni inthe United States through our separate subsidiary,Asegua Therapeutics, LLC . In addition, we sell and distribute certain products through our corporate partners under collaborative agreements. Business Highlights(1) Oncology •InMarch 2021 ,European Medicines Agency ("EMA") validated the Marketing Authorization Application for sacituzumab govitecan-hziy for the treatment of metastatic triple-negative breast cancer ("mTNBC"). •InApril 2021 ,U.S. Food and Drug Administration ("FDA") granted full approval of Trodelvy (sacituzumab govitecan-hziy) for adult patients with unresectable locally advanced or mTNBC. •InApril 2021 , FDA granted accelerated approval of Trodelvy for use in adult patients with locally advanced or metastatic urothelial cancer, a new indication. 29 -------------------------------------------------------------------------------- •InMarch 2021 , FDA granted accelerated approval of Yescarta for the treatment of adult patients with relapsed or refractory follicular lymphoma. Viral Diseases •InMarch 2021 , we completed the acquisition ofMYR GmbH ("MYR"). The acquisition provides us with Hepcludex, which is conditionally approved by EMA for the treatment of chronic hepatitis delta virus ("HDV") in adults with compensated liver disease. •InMarch 2021 , we entered into an agreement withMerck Sharp & Dohme Corp ("Merck"), a subsidiary of Merck & Co., Inc. to jointly develop and commercialize long-acting treatments in HIV that combine Gilead's investigational capsid inhibitor, lenacapavir, and Merck's investigational nucleoside reverse transcriptase translocation inhibitor, islatravir. COVID-19 •InApril 2021 , we announced we will provide assistance and support for expansion of local manufacturing capacity of remdesivir inIndia and donation of active pharmaceutical ingredient. In addition, we will donate a minimum of 450,000 vials of Veklury (remdesivir) to the government ofIndia . ______________________________________________________ (1) We announced and discussed these updates, subsequent to the issuance of our 2020 Annual Report on Form 10-K, in further detail in press releases available on our website at https://www.gilead.com/news-and-press/press-room/press-releases. Readers are also encouraged to review all other press releases available on our website mentioned above. Website references are provided throughout this document for convenience. The content on the referenced websites does not constitute a part of and is not incorporated by reference into this Quarterly Report on Form 10-Q. Financial Highlights Three Months Ended March 31, (in millions, except percentages and per share amounts) 2021 2020 Change Total revenues$ 6,423 $ 5,548 16 % Net income attributable to Gilead$ 1,729 $ 1,551 11 % Diluted earnings per share$ 1.37 $ 1.22 12 % Total revenues increased by 16% to$6.4 billion for the first quarter of 2021, compared to$5.5 billion for the same period in 2020, primarily due to Veklury sales. Net income attributable to Gilead increased by 11% to$1.7 billion for the first quarter of 2021, compared to$1.6 billion for the same period in 2020. Diluted earnings per share increased 12% to$1.37 for the first quarter of 2021, compared to$1.22 for the same period in 2020. The increases from 2020 to 2021 were primarily due to revenue growth, partially offset by unfavorable changes in the fair value of our equity investments primarily in Galapagos NV ("Galapagos") and lower interest income. 30 -------------------------------------------------------------------------------- RESULTS OF OPERATIONS Total Revenues The following table summarizes the period-over-period changes in our revenues: Three Months Ended March 31, (in millions, except percentages) 2021 2020 Change Product sales: HIV$ 3,650 $ 4,134 (12)% Veklury 1,456 - NM HCV 510 729 (30)% HBV/HDV 220 186 18% Cell Therapy 191 140 36% Trodelvy 72 - NM Other 241 278 (13)% Total product sales 6,340 5,467 16% Royalty, contract and other revenues 83 81 2% Total revenues$ 6,423 $ 5,548 16%
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NM - Not Meaningful For the first quarter of 2021 compared to the first quarter of 2020 Total Product Sales Total product sales increased by 16% to$6.3 billion for the first quarter of 2021, compared to$5.5 billion for the same period in 2020, primarily due to sales of Veklury, our FDA-approved treatment for hospitalized patients with COVID-19. The first quarter of 2021 reflects growth inCell Therapy , Trodelvy and hepatitis B virus ("HBV")/hepatitis delta virus ("HDV"). We obtained Trodelvy through the acquisition of Immunomedics, Inc. ("Immunomedics") in the fourth quarter of 2020. The increases were partially offset by lower HIV product sales primarily due to the continued generic competition following theOctober 2020 loss of exclusivity of Truvada and Atripla inthe United States , in addition to higher channel inventory purchases in the first quarter of 2020 due to the COVID-19 pandemic. The decline in HCV sales was mainly driven by lower patient starts due to the continued impact of the pandemic. HIV HIV product sales decreased by 12% to$3.7 billion for the first quarter of 2021, compared to$4.1 billion for the same period in 2020. The decline was primarily due to the anticipated decline in sales volume of our Truvada (emtricitabine ("FTC") and tenofovir disoproxil fumarate ("TDF"))-based products driven by the continued generic competition following theOctober 2020 loss of exclusivity of Truvada and Atripla inthe United States , as well as the pull forward of channel inventory purchases in the first quarter of 2020 due to the COVID-19 pandemic. The decline was partially offset by market share increase and continued patient uptake of Biktarvy. We expect Truvada sales to continue to decline in 2021 and beyond as multiple generics are expected to enter the market starting in the second quarter of 2021. Descovy (FTC /TAF)-based product sales decreased in the first quarter of 2021, primarily driven by COVID-19 related channel inventory purchases in the first quarter of 2020, in addition to the impact of ongoing pandemic-related effects on the pre-exposure prophylaxis ("PrEP") market, offset by Biktarvy growth. HCV HCV product sales decreased by 30% to$510 million for the first quarter of 2021, compared to$729 million for the same period in 2020, primarily due to lower volume driven by lower patient starts, which continued to be impacted by the COVID-19 pandemic. HBV/HDV HBV and HDV product sales increased by 18% to$220 million for the first quarter of 2021, compared to$186 million for the same period in 2020, primarily due to higher Vemlidy sales volume in certain international locations. The first quarter of 2021 also reflects$6 million of Hepcludex sales following the completion of our acquisition of MYR onMarch 4, 2021 . 31 --------------------------------------------------------------------------------
Veklury
Veklury generated$1.5 billion in sales in the first quarter of 2021. There were no Veklury sales in the first quarter of 2020. Sales of Veklury generally are affected by COVID-19 related rates of infections, hospitalizations and vaccinations, and will continue to be subject to significant volatility and uncertainty.Cell Therapy Cell Therapy product sales, which include Tecartus and Yescarta, increased by 36% to$191 million for the first quarter of 2021, compared to$140 million for the same period in 2020. The growth was primarily due to theJuly 2020 launch of Tecartus inthe United States and the continued uptake and geographic expansion of Yescarta inEurope . Trodelvy Trodelvy generated$72 million in sales inthe United States for the first quarter of 2021 following the completion of our acquisition of Immunomedics onOctober 23, 2020 . Other Product Sales Other product sales, which include AmBisome, Cayston, Jyseleca, Letairis, Ranexa and Zydelig, decreased by 13% to$241 million in the first quarter of 2021, compared to$278 million for the same period in 2020. Letairis and Ranexa sales were lower in the first quarter of 2021, as anticipated, due to continued generic competition, following the losses of exclusivity in 2019. Product Sales by Geographic Area Of our total product sales, 33% and 27% were generated outsidethe United States for the first quarter of 2021 and 2020, respectively. We generally face exposure to movements in foreign currency exchange rates, primarily in the Euro. We use foreign currency exchange contracts to hedge a portion of our foreign currency exposures. Foreign currency exchange, net of hedges, had a favorable impact on our product sales of$80 million for the first quarter of 2021, based on a comparison using foreign currency exchange rates from the first quarter of 2020. Product sales inthe United States increased by 6% to$4.2 billion in the first quarter of 2021, compared to$4.0 billion for the same period in 2020, primarily due to sales of Veklury as well as sales of Trodelvy and the launch of Tecartus in the third quarter of 2020. The increases were partially offset by continued generic competition from the loss of exclusivity of Truvada and Atripla, lower HCV sales and the anticipated decline in sales volume of Letairis and Ranexa following the losses of exclusivity in 2019. Product sales inEurope increased by 38% to$1.3 billion for the first quarter of 2021, compared to$927 million for the same period in 2020, primarily due to sales of Veklury, the continued patient uptake of Biktarvy, and the continued patient uptake and geographic expansion of Yescarta. The increase was partially offset by lower HCV sales driven by lower patient starts due to the continued impact from the COVID-19 pandemic. The lower HCV sales were partially offset by higher average net selling price due to a favorable government rebate adjustment. Foreign currency exchange, net of hedges, had a favorable impact on ourEurope product sales of$52 million for the first quarter of 2021, based on a comparison using foreign currency exchange rates from the first quarter of 2020. Product sales in other locations increased by 50% to$825 million for the first quarter of 2021, compared to$551 million for the same period in 2020, primarily due to higher sales volumes of Veklury, Biktarvy and Vemlidy. The following table summarizes the period-over-period changes in our product sales: Three Months Ended March 31, (in millions, except percentages) 2021 2020
Change
HIV Products Descovy (FTC /TAF) Based Products Biktarvy - U.S.$ 1,465 $ 1,412 4 % Biktarvy - Europe 216 181 19 % Biktarvy - Other International 143 100 43 % 1,824 1,693 8 % Descovy - U.S. 282 363 (22) % Descovy - Europe 42 61 (31) % Descovy - Other International 35 34 3 % 359 458 (22) % 32
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Genvoya - U.S. 506 612 (17) % Genvoya - Europe 106 151 (30) % Genvoya - Other International 61 61 - % 673 824 (18) % Odefsey - U.S. 240 269 (11) % Odefsey - Europe 113 127 (11) % Odefsey - Other International 14 13 8 % 367 409 (10) % Revenue share - Symtuza(1) - U.S. 89 72 24 % Revenue share - Symtuza(1) - Europe 44 38 16 % Revenue share - Symtuza(1) - Other International 2
2 - %
135
112 21 %
Total Descovy (FTC/TAF) Based Products - U.S. 2,582 2,728 (5) % Total Descovy (FTC/TAF) Based Products - Europe 521 558 (7) % Total Descovy (FTC/TAF) Based Products - Other International 255
210 21 %
3,358 3,496 (4) % Truvada (FTC /TDF) Based Products Atripla - U.S. 23 81 (72) % Atripla - Europe 4 7 (43) % Atripla - Other International 4 7 (43) % 31 95 (67) % Complera / Eviplera - U.S. 25 24 4 % Complera / Eviplera - Europe 34 47 (28) % Complera / Eviplera - Other International 4 5 (20) % 63 76 (17) % Stribild - U.S. 31 34 (9) % Stribild - Europe 11 17 (35) % Stribild - Other International 4 2 100 % 46 53 (13) % Truvada - U.S. 119 383 (69) % Truvada - Europe 7 8 (13) % Truvada - Other International 9
15 (40) %
135
406 (67) %
Total Truvada (FTC/TDF) Based Products - U.S. 198 522 (62) % Total Truvada (FTC/TDF) Based Products - Europe 56 79 (29) % Total Truvada (FTC/TDF) Based Products - Other International 21 29 (28) % 275 630 (56) % Other HIV(2) - U.S. 6 3 100 % Other HIV(2) - Europe 1 2 (50) % Other HIV(2) - Other International 10 3 NM 17 8 NM Total HIV - U.S. 2,786 3,253 (14) % Total HIV - Europe 578 639 (10) % Total HIV - Other International 286
242 18 %
3,650 4,134 (12) % HCV Products Ledipasvir / Sofosbuvir(3) - U.S. 19 53 (64) % Ledipasvir / Sofosbuvir(3) - Europe 16 11 45 % Ledipasvir / Sofosbuvir(3) - Other International 21 48 (56) % 56 112 (50) % 33
-------------------------------------------------------------------------------- Sofosbuvir / Velpatasvir(4) - U.S. 214 311 (31) % Sofosbuvir / Velpatasvir(4) - Europe 75 122 (39) % Sofosbuvir / Velpatasvir(4) - Other International 92 131 (30) % 381 564 (32) % Other HCV(5) - U.S. 25 34 (26) % Other HCV(5) - Europe 44 15 NM Other HCV(5) - Other International 4 4 - % 73 53 38 % Total HCV - U.S. 258 398 (35) % Total HCV - Europe 135 148 (9) % Total HCV - Other International 117 183 (36) % 510 729 (30) % HBV/HDV Products Vemlidy - U.S. 77 73 5 % Vemlidy - Europe 8 7 14 % Vemlidy - Other International 96 56 71 % 181 136 33 % Viread - U.S. 4 4 - % Viread - Europe 7 11 (36) % Viread - Other International 20 25 (20) % 31 40 (23) % Other HBV/HDV(6) - U.S. - 8 NM Other HBV/HDV(6) - Europe 8 2 NM Other HBV/HDV(6) - Other International - - NM 8 10 (20) % Total HBV/HDV - U.S. 81 85 (5) % Total HBV/HDV - Europe 23 20 15 % Total HBV/HDV - Other International 116 81 43 % 220 186 18 % Veklury Veklury - U.S. 820 - NM Veklury - Europe 388 - NM Veklury - Other International 248 - NM 1,456 - NM Cell Therapy Products Tecartus - U.S. 27 - NM Tecartus - Europe 4 - NM Tecartus - Other International - - NM 31 - NM Yescarta - U.S. 92 103 (11) % Yescarta - Europe 61 37 65 % Yescarta - Other International 7 - NM 160 140 14 % Total Cell Therapy - U.S. 119 103 16 % Total Cell Therapy - Europe 65 37 76 % Total Cell Therapy - Other International 7 - NM 191 140 36 % Trodelvy - U.S. 72 - NM Other Products AmBisome - U.S. 12 18 (33) % AmBisome - Europe 66 59 12 % AmBisome - Other International 43 42 2 % 121 119 2 % 34
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Letairis - U.S. 54 83 (35) % Ranexa - U.S. 3 8 (63) % Zydelig - U.S. 8 8 - % Zydelig - Europe 7 12 (42) % Zydelig - Other International - - NM 15 20 (25) % Other(7) - U.S. 27 33 (18) % Other(7) - Europe 13 12 8 % Other(7) - Other International 8 3 NM 48 48 - % Total Other - U.S. 104 150 (31) % Total Other - Europe 86 83 4 % Total Other - Other International 51 45 13 % 241 278 (13) % Total product sales - U.S. 4,240 3,989 6 % Total product sales - Europe 1,275 927 38 % Total product sales - Other International 825 551 50 %$ 6,340 $ 5,467 16 %
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NM - Not Meaningful (1) Represents our revenue from cobicistat (C), emtricitabine (FTC) and tenofovir alafenamide (TAF) in Symtuza (darunavir/C/FTC /TAF), a fixed dose combination product commercialized byJanssen Sciences Ireland Unlimited Company . (2) Includes Emtriva and Tybost. (3) Amounts consist of sales of Harvoni and the authorized generic version of Harvoni sold by our separate subsidiary,Asegua Therapeutics LLC . (4) Amounts consist of sales of Epclusa and the authorized generic version of Epclusa sold by our separate subsidiary,Asegua Therapeutics LLC . (5) Includes Vosevi and Sovaldi. (6) Includes Hepcludex and Hepsera. The first quarter of 2021 includes$6 million Hepcludex sales, following the completion of our acquisition of MYR onMarch 4, 2021 . (7) Includes Cayston and Jyseleca. Costs and Expenses The following table summarizes the period-over-period changes in our costs and expenses: Three Months Ended March 31, (in millions, except percentages) 2021 2020 Change Cost of goods sold$ 1,361 $ 969 40 % Product gross margin 78.5 % 82.3 % -380 bps Research and development ("R&D") expenses$ 1,055 $ 1,004 5 % Acquired IPR&D expenses$ 62 $ 97 (36) % Selling, general and administrative ("SG&A") expenses$ 1,055 $ 1,076 (2) % Cost of Goods Sold and Product Gross Margin Cost of goods sold for the first quarter of 2021 increased by$392 million , or 40%, compared to the same period in 2020, primarily due to higher acquisition-related expenses from amortization of finite-lived intangible assets and inventory step-up charges of$506 million driven by our fourth quarter 2020 acquisition of Immunomedics, as well as increased product sales. The increase was partially offset by a decline in royalty expenses primarily due to lower sales of products containing emtricitabine and elvitegravir. Product gross margin for the first quarter of 2021 decreased primarily due to factors mentioned above and unfavorable product sales mix and an inventory reserve adjustment. Research and Development Expenses R&D expenses consist primarily of clinical studies performed by contract research organizations, materials and supplies, payments under collaborative and other arrangements including milestone payments, licenses and fees, expense reimbursements to the collaboration partners, personnel costs including salaries, benefits and stock-based compensation expense, and overhead allocations including various support and infrastructure costs. 35 -------------------------------------------------------------------------------- We do not track total R&D expenses by product candidate, therapeutic area or development phase. However, we manage our R&D expenses by identifying the R&D activities we anticipate will be performed during a given period and then prioritizing efforts based on scientific data, probability of technical and regulatory successful development, market potential, available human and capital resources and other considerations. We continually review our R&D projects based on unmet medical need and, as necessary, reallocate resources among our internal R&D portfolio and external opportunities that we believe will best support the long-term growth of our business. The following table provides a breakout of our R&D expenses by major cost type: Three Months Ended March 31, (in millions, except percentages) 2021
2020 Change
Clinical studies and outside services$ 338 $
421 (20) %
Personnel, infrastructure and other expenses 654
519 26 %
Stock-based compensation expenses 63 64 (2) % Total$ 1,055 $ 1,004 5 % R&D expenses for the first quarter of 2021 increased by 5%, compared to the same period in 2020, primarily due to higher expenses driven by headcount growth due to the fourth quarter 2020 acquisition of Immunomedics and higher investments in oncology programs including magrolimab and Trodelvy. Partly offsetting these increases, we incurred lower expenses on other programs, including cancellations of certain filgotinib programs in connection with theDecember 2020 amended agreement with Galapagos. The first quarter 2020 R&D expenses also reflected investments in remdesivir due to the manufacturing ramp-up and clinical trial costs prior to the commercialization of Veklury.Acquired In-Process Research and Development Expenses Acquired IPR&D expenses reflect IPR&D impairments as well as the initial costs of externally developed IPR&D projects, acquired directly in a transaction other than a business combination, that do not have an alternative future use, including upfront payments related to various collaborations and the initial costs of rights to IPR&D projects. Beginning in the second quarter of 2020, acquired IPR&D expenses were reported separately from Research and development expenses on our Condensed Consolidated Statements of Income. IPR&D assets capitalized are tested for impairment in the fourth quarter of each year, or earlier if impairment indicators exist. No IPR&D impairment charges were recorded during the three months endedMarch 31, 2021 and 2020. Acquired IPR&D expenses of$62 million and$97 million for the first quarter of 2021 and 2020, were related to licensing, collaboration, investment and other arrangements we entered into during the periods. Selling, General and Administrative Expenses SG&A expenses relate to sales and marketing, finance, human resources, legal and other administrative activities, including information technology investments. Expenses consist primarily of personnel costs, facilities and overhead costs, outside marketing, advertising and legal expenses and other general and administrative costs. SG&A expenses also include the branded prescription drug fee. SG&A expenses for the first quarter of 2021 decreased by$21 million or 2%, compared to the same period in 2020. The decrease was primarily due to lower corporate grants and lower promotional expenses in HIV and HCV, partially offset by higher costs associated with the commercialization efforts for Veklury, Trodelvy andCell Therapy . Other Income (Expense), Net and Interest Expense The following table summarizes the period-over-period changes in our Other income (expense), net and Interest expense: Three Months Ended March 31, (in millions, except percentages) 2021 2020 Change Other income (expense), net$ (369) $ (158) NM Interest expense$ (257) $ (241) 7 %
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NM - Not Meaningful The change in Other income (expense), net for the first quarter of 2021, compared to the same period in 2020, was primarily due to unfavorable changes in the fair value of investments in equity securities driven by our equity investment in Galapagos. 36 -------------------------------------------------------------------------------- Interest expense for the first quarter of 2021 increased by$16 million or 7%, compared to the same period in 2020, primarily due to an increase in borrowing driven by the fourth quarter 2020 acquisition of Immunomedics, partially offset by favorable effects from debt maturities and repayments. Income Taxes The following table summarizes the period-over-period changes in our Income tax expense: Three Months Ended March 31, (in millions, except percentages) 2021 2020 Change Income before income taxes$ 2,264 $ 2,003 $ 261 Income tax expense$ 542 $ 465 $ 77 Effective tax rate 23.9 % 23.2 % 0.7 % Our effective tax rate and provision increased for the first quarter of 2021, compared to the same period in 2020, primarily due to unfavorable changes in the fair value of our equity investments primarily in Galapagos that are non-deductible for income tax purposes, partially offset by net discrete tax benefits related to favorable settlements with taxing authorities. LIQUIDITY AND CAPITAL RESOURCES We believe that our existing capital resources, supplemented by our cash flows generated from operating activities, will be adequate to satisfy our capital needs for the foreseeable future. The following table summarizes our cash, cash equivalents and marketable debt securities and working capital: (in millions) March 31, 2021 December 31, 2020 Cash, cash equivalents and marketable debt securities$ 6,245 $ 7,910 Working capital$ 3,573 $ 4,599 Cash,Cash Equivalents and Marketable Debt Securities Cash, cash equivalents and marketable debt securities as ofMarch 31, 2021 decreased by$1.7 billion , or 21%, compared toDecember 31, 2020 . During the first quarter of 2021, we generated$2.6 billion in operating cash flow, made early debt repayments of$1.25 billion , which included$1.0 billion principal amount of senior unsecured notes due inApril 2021 and$250 million principal amount under our$1.0 billion three-year senior unsecured term loan facility. In addition, we utilized$1.2 billion on the MYR acquisition, including IPR&D, net of cash acquired, paid cash dividends of$917 million and utilized$309 million on repurchases of our common stock. Working Capital Working capital, which is current assets less current liabilities, decreased by$1.0 billion , or 22%, compared toDecember 31, 2020 , primarily due to the utilization of cash, cash equivalents and marketable debt securities for our acquisition of MYR as noted above. Accounts receivable decreased by$1.0 billion , compared toDecember 31, 2020 , primarily due to collections of Veklury receivables during the first quarter of 2021. Other accrued liabilities decreased by$829 million compared toDecember 31, 2020 , primarily due to certain tax payments made to taxing authorities during the first quarter of 2021. Cash Flows The following table summarizes our cash flow activities: Three Months Ended March 31, (in millions) 2021 2020 Cash provided by (used in): Operating activities$ 2,610 $ 1,436 Investing activities$ (2,042) $ (344) Financing activities$ (2,477) $ (2,611) 37
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Operating Activities Cash provided by operating activities represents the cash receipts and disbursements related to all activities other than investing and financing activities. Operating cash flow is derived by adjusting our net income for non-cash items and changes in operating assets and liabilities. Cash provided by operating activities increased by$1.2 billion to$2.6 billion for the first quarter of 2021, compared to the same period in 2020. The increase was primarily the result of changes in working capital reflecting collections of Veklury receivables during the first quarter of 2021. Investing Activities Cash used in investing activities primarily consists of purchases, sales and maturities of our marketable debt securities, capital expenditures, acquisitions, including IPR&D, net of cash acquired, purchases of equity securities and other investments. Cash used in investing activities increased by$1.7 billion to$2.0 billion for the first quarter of 2021, compared to the same period in 2020, primarily due to our acquisition of MYR. Financing Activities The change in cash used in financing activities for the first quarter of 2021, compared to the same period in 2020, was primarily due to$1.0 billion lower repurchases of our common stock, partially offset by$750 million higher repayments of debt during the first quarter of 2021. Debt and Credit Facilities A summary of our borrowings under various financing arrangements is included in Note 10. Debt and Credit Facilities of the Notes to Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report on Form 10-Q. We may choose to repay certain of our long-term debt obligations prior to maturity dates based on our assessment of current and long-term liquidity and capital requirements. During the three months endedMarch 31, 2021 , we repaid$1.25 billion of debt. InJanuary 2021 , we repaid$1.0 billion of senior unsecured notes prior to theApril 2021 maturity, by exercising a 3-month par call. InMarch 2021 , we repaid$250 million principal amount under our$1.0 billion three-year senior unsecured term loan facility, leaving$750 million principal amount outstanding as ofMarch 31, 2021 . As ofMarch 31, 2021 andDecember 31, 2020 , there were no amounts outstanding under our$2.5 billion revolving credit facility maturing inJune 2025 . We are required to comply with certain covenants under our note indentures governing our senior unsecured notes. As ofMarch 31, 2021 , we were in compliance with all covenants. CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS The preparation of our Condensed Consolidated Financial Statements in accordance withU.S. GAAP requires management to make estimates and judgments that affect the reported amounts in the financial statements and related disclosures. On an ongoing basis, we evaluate our significant accounting policies and estimates. We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates are assessed each period and updated to reflect current information, such as the economic considerations related to the impact that the recent COVID-19 pandemic could have on our significant accounting estimates. Actual results may differ significantly from these estimates. A summary of our critical accounting policies and estimates is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020. There were no material changes to our critical accounting policies and estimates during the three months endedMarch 31, 2021 . OFF-BALANCE SHEET ARRANGEMENTS We do not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K. RECENT ACCOUNTING PRONOUNCEMENTS There have been no new accounting pronouncements issued nor adopted during the three months endedMarch 31, 2021 that are of significance to us. ACQUISITIONS, COLLABORATIONS AND OTHER ARRANGEMENTS See Note 6. Acquisitions and Note 9. Collaborations and Other Arrangements of the Notes to Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report on Form 10-Q for additional information.
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