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 U.S. 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 U.S. 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.