Shares of Amgen Inc. fell essentially the most in a 12 months after the corporate disclosed that it’s going through a possible tax invoice of at the very least $7.1 billion from the Inner Income Service.
The IRS is searching for $5.1 billion in again taxes associated to how revenue was allotted between Amgen’s entities in Puerto Rico and within the mainland U.S. for the years 2013 to 2015, along with about $2 billion in penalties. The drugmaker disclosed the information with its first-quarter outcomes on Wednesday, and it largely overshadowed better-than-expected income and earnings.
Many pharmaceutical firms have operations in Puerto Rico, the place income are taxed at a decrease fee. Amgen has been in a spat with the IRS for greater than a 12 months over this problem, and the corporate had already disclosed that the company is searching for $3.6 billion in again taxes for the years 2010 by means of 2012. Amgen desires to consolidate the 2 instances in tax courtroom and mentioned the dispute will seemingly take a number of years to resolve.
Amgen Inc. headquarters in Thousand Oaks, California.
Patrick T. Fallon/Bloomberg
Yaron Werber, a senior biotechnology analyst at Cowen Inc., mentioned the timing of the IRS actions is “weird” since Amgen’s Puerto Rico operations are well-known and have been part of its enterprise for a very long time.
Amgen has contested the 2010 to 2012 problem in U.S. Tax Courtroom and plans to file a petition disputing the latest motion. Chief Monetary Officer Peter Griffith informed analysts on a convention name that the corporate is “very assured” in its tax reserves.
Werber mentioned the tax problem isn’t a grave concern for buyers.
“There’s additionally an assumption that what the U.S. authorities is beginning with is type of the worst-case situation, topic to negotiation and litigation, and on the finish, it’s going to be a way more appetizing decision,” he mentioned.
Shares of the Thousand Oaks, California-based firm slid as a lot as 7.1% on Thursday, their greatest drop since April 2021.