Amgen Inc. reported first-quarter results on Wednesday, but a looming tax issue with a potential $7.1 billion price tag eclipsed the results for investors, driving down the share price.
The Thousand Oaks pharmaceutical company reported adjusted quarterly net income of $2.3 billion ($4.25 a share), a 15 increase year-over-year. Revenues increased 6% to $6.2 billion.
However, Amgen also announced a potential back tax issue.
“The Internal Revenue Service (IRS) issued a deficiency notice to Amgen proposing some adjustments for the 2010-15 period earlier this month, primarily related to the allocation of profits between US entities and Puerto Rico,” the company said in a statement. “The notice aims to increase Amgen’s taxable income for the 2013-2015 period that will result in an additional federal tax of approximately $5.1 billion-plus interest. The IRS additionally proposed penalties of approximately $2 billion for the period 2013 to 2015. The IRS is also currently auditing the 2016 to 2018 period.”
The company said it thinks the adjustments and penalties “are without merit” and is considering a petition to the US Tax Court.
“Amgen will vigorously contest the adjustments and penalties proposed by the Internal Revenue Service,” it said in a statement. “Amgen is confident in its position in the dispute, and in the level of reserves the Company has established.”
Shares of Amgen (AMGN) closed Thursday down $10.66, or 4.3 percent, to $238.13 on the Nasdaq, a market that closed up 3 percent.
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