On the surface, Gilead Sciences' (NASDAQ:GILD) second quarter was ugly. Revenue and earnings both declined year over year.

Sales decreased 10% in the second quarter to $5.1 billion, with Gilead's hepatitis C drug franchise contributing to most of the decline, down a whopping 47% year over year.

Much of the decline can be blamed on COVID-19 causing fewer patients to see their doctors and therefore be screened for hepatitis C virus infection. In addition to issues with the pandemic, the franchise was already faced with declining prices as well as headwind caused by a rebate from sales in Europe in the year-ago quarter.

Sales of Gilead's HIV franchise, which has been the backbone of the biotech, fell 1% in the second quarter. Some of the slump was expected as sales were pulled forward into the first quarter when the pandemic started; looking at the first half of the year, sales of HIV drugs were up 6% year over year, which isn't horrible, but is still lower than expected due to slumping sales of pre-exposure prophylaxis drugs as patients avoid their doctor's office.

Doctor behind a desk talking to a patient

Image source: Getty Images.

On the bottom line, earnings were negative due to charges associated with the acquisition of Forty Seven. Excluding those and other issues, adjusted earnings per share were still down, coming in at $1.11, compared to $1.72 in the year-ago quarter, as Gilead increased spending on research and development to get its COVID-19 treatment, remdesivir, to market.

While it was an ugly quarter for the drugmaker, management sees things turning around in the second half of the year. Sales are expected to fall in the $23 billion to $25 billion range, up from previous guidance of $21.8 billion to $22.2 billion. Guidance for adjusted earnings per share is also higher than previously expected, with new guidance of $6.25 to $7.65.