Pfizer Swings to Loss on $4.3 Billion Impairment as Growth Slows
Pfizer posted a reported loss of $(0.04) a share in the second quarter after taking $4.3 billion in non-cash intangible impairments, even as it raised full-year revenue guidance by $500 million.
Pfizer (PFE) reported a second-quarter loss as non-cash impairment charges outweighed underlying revenue gains, while the drugmaker raised its full-year revenue outlook and disclosed a leadership change atop the finance function. The company posted reported diluted earnings per share of $(0.04), reversing a profit of $0.47 in the first quarter and $0.51 a year earlier, after recording $4.3 billion of non-cash intangible asset impairments.
The quarter arrived alongside a broader slowdown in top-line growth. Revenue rose 1% operationally year-over-year to $15.0 billion, decelerating from 2% operational growth in the first quarter, while the ex-COVID growth rate slowed to 5% operationally from 7%. Launched and Acquired Products, a key growth driver for the company, also cooled, expanding 18% year-over-year in the second quarter versus 22% in the first.
Adjusted diluted earnings per share, which strips out the impairment and other one-time items, was flat at $0.77 against $0.78 a year earlier. That represented an improvement in trend from the first quarter, when adjusted EPS had fallen 18% year-over-year to $0.75 from $0.92. Gross margin continued to erode, with cost of sales rising to 27.2% of revenue from 25.8% a year earlier, a compression also visible in the six-month figures.
COVID-19 products drove much of the pressure on the top line. Paxlovid revenue fell 95% operationally year-over-year, a sharp deterioration from the more moderate COVID-related softness described in prior quarters, while Comirnaty revenue declined 34% operationally, which Pfizer attributed to a smaller favorable returns-provision adjustment and a narrower U.S. vaccination recommendation. Adjusted research and development spending moved in the opposite direction, accelerating to 12% operational growth year-over-year as the company funded its oncology and obesity pipeline.
Pfizer raised its full-year 2024 revenue guidance to $60.5 billion to $62.5 billion, up $500 million at the midpoint from the $59.5 billion to $62.5 billion range reaffirmed in the first quarter. The increase reflected a roughly $1.5 billion upgrade to the non-COVID product outlook that was partly offset by a cut to the COVID-19 revenue expectation, to about $4 billion from about $5 billion previously. Full-year adjusted diluted EPS guidance was reaffirmed for a third straight quarter at $2.80 to $3.00, though the company said the range now absorbs a new roughly $0.10 headwind from a $650 million acquired in-process research and development charge tied to the Innovent Biologics deal, to be recorded in the third quarter.
The Innovent transaction, a global licensing and collaboration agreement announced in May and closed July 10, carried a $650 million upfront payment and up to $9.85 billion in potential milestones, and appeared in the anchor release as a completed deal for the first time after being flagged only as pending in first-quarter guidance assumptions. Pfizer also disclosed an additional $2.5 billion in net cost savings targeted for 2027 through 2029, split between $1.0 billion from its existing cost-realignment program and $1.5 billion from a new phase focused on cost of goods sold, lifting total expected savings from the two programs to roughly $6.7 billion and $3.0 billion, respectively.
Chief Financial Officer Dave Denton will depart effective August 15, with Cecile Guegan named interim CFO effective August 16. The company completed no share repurchases in 2024 to date, leaving $3.3 billion of authorization outstanding, while cash dividends paid over the first six months rose to $4.9 billion, or $0.86 a share, from $2.4 billion, or $0.43 a share, for the three months ended in the first quarter.