Amgen Inc. (NASDAQ:AMGN)

The financial data indicates a general increase in the value of goodwill over the five-year period, rising from 14,689 million US dollars in 2020 to 18,637 million US dollars in 2024. This represents a steady appreciation, with a notable jump between 2022 and 2023.

The developed-product-technology rights exhibit a significant upward trend, especially between 2022 and 2023, where the value increased sharply from approximately 29,028 million to 48,631 million US dollars. This value remains relatively stable into 2024. Such an increase suggests intensified investment or acquisitions in developed-product technologies during this period.

Licensing rights remain relatively constant throughout the years, fluctuating slightly between 3,743 million and 3,875 million US dollars, indicating stability in this asset category. Marketing-related rights show a gradual decline from 1,367 million US dollars in 2020 to 1,202 million in 2024, reflecting a possible reduction in marketing-related intangible assets or reclassification.

The R&D technology rights maintain a steady level across the years, with a minor increase from 1,317 million US dollars in 2020 to a peak of 1,394 million in 2023, followed by a slight decline in 2024. This suggests consistent investment or capitalization in research and development technologies.

Looking at the finite-lived intangible assets (gross carrying amount), there is a notable increase from 32,018 million US dollars in 2020 to a peak of 55,229 million in 2023, slightly decreasing to 55,062 million in 2024. Accumulated amortization has increased in magnitude every year, from -15,461 million US dollars in 2020 to -28,423 million in 2024, indicating ongoing amortization expenses that reduce the net book value.

The net finite-lived intangible assets reflect initial volatility, decreasing slightly in 2021 to 14,112 million US dollars, then rising to 15,071 million in 2022, before a substantial jump in 2023 to 31,423 million and then a decrease to 26,639 million in 2024. The spike and subsequent decline could be due to new asset acquisitions followed by increased amortization or disposals.

In-process research and development assets and indefinite-lived intangible assets correlate in values and trends, climbing from 30 million US dollars in 2020 to over 1,000 million in subsequent years, peaking in 2023, and dipping slightly in 2024. The simultaneous movement suggests these categories may represent similar or related asset types.

Other intangible assets (net) follow a trend similar to finite-lived assets, with a growth from 16,587 million US dollars in 2020 to 32,641 million in 2023, followed by a decrease to 27,699 million in 2024. This pattern confirms a phase of intangible asset growth succeeded by partial reduction or higher amortization.

Overall, the total of goodwill and other intangible assets increased from 31,276 million US dollars in 2020 to reach a peak of 51,270 million in 2023, then decreased to 46,336 million in 2024. This pattern reflects the company’s active management of intangible assets with periods of acquisition or capitalization followed by amortization or impairment.

The financial data exhibits notable fluctuations over the five-year period under review. Both reported and adjusted total assets demonstrate a general upward trajectory, with reported total assets increasing from $62,948 million in 2020 to a peak of $97,154 million in 2023 before retreating to $91,839 million in 2024. Adjusted total assets follow a similar pattern but at lower absolute values, rising from $48,259 million in 2020 to $78,525 million in 2023 and subsequently declining to $73,202 million in 2024.

Reported stockholders’ equity shows a declining trend initially, dropping sharply from $9,409 million in 2020 to $3,661 million in 2022. However, a recovery is observed in 2023, increasing to $6,232 million, followed by a slight decrease to $5,877 million in 2024. In contrast, adjusted stockholders’ equity remains negative throughout the period, indicating a persistent deficit situation. This figure deteriorates consistently from -$5,280 million in 2020 to -$12,760 million in 2024, highlighting worsening adjusted equity despite fluctuations in reported equity.

Overall, the data suggest growth in total assets on both a reported and adjusted basis, although the adjusted figures are significantly lower due to goodwill adjustments. The equity position, when adjusted for goodwill, reflects a negative and increasing deficit, posing potential concerns regarding the underlying asset quality or impairment-related adjustments. The divergence between reported and adjusted equity trends underscores the impact of goodwill and related accounting considerations on the company’s financial structure.

The analysis of financial performance over the five-year period reveals several key trends and notable shifts in operational efficiency and profitability metrics.

Total Asset Turnover

Reported total asset turnover exhibited slight fluctuations, starting at 0.39 in 2020, peaking marginally at 0.40 in 2021, then declining to a low of 0.28 in 2023 before recovering slightly to 0.35 in 2024. Adjusted total asset turnover, which excludes goodwill effects, consistently shows higher values but follows a similar pattern. It peaked at 0.53 in 2021, declined to 0.34 in 2023, and improved to 0.44 in 2024. These trends suggest that asset efficiency, when adjusted for goodwill, is higher but experienced a notable dip in the middle years before partial recovery.

Financial Leverage

Reported financial leverage showed a strong upward trend, increasing significantly from 6.69 in 2020 to a peak of 17.79 in 2022, followed by a slight decrease but remaining elevated at 15.63 in 2024. This indicates increasing reliance on debt or liabilities to finance assets, which could imply higher financial risk over the period. Adjusted financial leverage data is missing, limiting deeper analysis in this area.

Return on Equity (ROE)

Reported ROE followed a highly volatile trajectory, beginning at 77.2% in 2020 and rising sharply to almost 179% in 2022, before declining to 69.59% by 2024. This suggests extraordinary profitability spikes followed by moderation, potentially driven by fluctuations in net income or equity base changes influenced by leverage and asset utilization. Adjusted ROE data was not provided, restricting insight into profitability excluding goodwill effects.

Return on Assets (ROA)

Reported ROA decreased steadily from 11.54% in 2020 to 4.45% in 2024, indicating declining effectiveness in generating profits from total assets. Adjusted ROA values were consistently higher than reported ones, starting at 15.05% in 2020 and decreasing to 5.59% in 2024, confirming that goodwill adjustment impacts profitability measures positively but both presented a clear downward trend. This decline suggests deteriorating asset profitability over time.

Overall, the data reveals a pattern of increasing financial leverage coupled with declining asset profitability, which might raise concerns about the sustainability of returns in coming years. The fluctuations in asset turnover and ROE suggest operational and financial instability during the period, despite some recovery in 2024. The absence of certain adjusted figures limits a comprehensive assessment of goodwill impact on financial leverage and equity returns.

The analysis of the reported and goodwill adjusted financial data reveals several notable trends over the five-year period.

Total Assets

Reported total assets showed fluctuations, beginning at 62,948 million US dollars at the end of 2020, decreasing slightly to 61,165 million in 2021, followed by an increase to 65,121 million in 2022. There was a significant jump to 97,154 million in 2023, before decreasing again to 91,839 million in 2024. This indicates a considerable increase in assets in 2023, followed by a partial contraction.

In contrast, adjusted total assets, which exclude goodwill, consistently presented lower values. These assets decreased from 48,259 million in 2020 to 46,275 million in 2021, then increased steadily to 49,592 million in 2022, surged to 78,525 million in 2023, and decreased to 73,202 million in 2024. The pattern mirrors the reported total assets but with lower absolute figures, reflecting the exclusion of goodwill and highlighting the impact of intangible asset adjustments on the asset base.

Total Asset Turnover

The reported total asset turnover, a measure of efficiency in using assets to generate revenue, was relatively stable around 0.39 to 0.40 in 2020 and 2021. It then slightly declined to 0.38 in 2022, followed by a significant drop to 0.28 in 2023, and a rebound to 0.35 in 2024. This trend suggests a decrease in asset utilization efficiency during 2023, coinciding with the sharp asset increase that year, with partial recovery the following year.

Adjusted total asset turnover exhibited a similar pattern but with consistently higher ratios than the reported figures, indicating higher efficiency when goodwill is excluded. It increased from 0.50 in 2020 to 0.53 in 2021, declined to 0.50 in 2022, dropped sharply to 0.34 in 2023, and improved to 0.44 in 2024. This pattern underscores that the removal of goodwill tends to reflect better operational efficiency, although the downturn in 2023 remains evident.

Total Assets

The reported total assets exhibit a fluctuating trend over the five-year period. Beginning at $62,948 million in 2020, there is a slight decline to $61,165 million in 2021, followed by an increase to $65,121 million in 2022. A notable surge occurs in 2023, reaching $97,154 million, before decreasing to $91,839 million in 2024. Adjusted total assets, which exclude goodwill, follow a similar pattern but at consistently lower levels, starting at $48,259 million in 2020 and rising to $78,525 million in 2023, then falling to $73,202 million in 2024. This suggests that goodwill constitutes a significant portion of total assets, especially evident in 2023 and 2024 when the gap between reported and adjusted assets widens markedly.

Stockholders’ Equity

Reported stockholders’ equity decreases sharply from $9,409 million in 2020 to $3,661 million in 2022, before partially recovering to $6,232 million in 2023 and slightly declining to $5,877 million in 2024. In contrast, the adjusted stockholders’ equity figures are negative throughout the period and worsen progressively, moving from -$5,280 million in 2020 to -$12,760 million in 2024. The increasingly negative adjusted equity indicates persistent underlying deficits when goodwill is removed, highlighting potential concerns about asset quality or impairment losses affecting shareholder value.

Financial Leverage

Reported financial leverage shows a significant upward trend from 6.69 in 2020 to a peak of 17.79 in 2022, indicating an increasing degree of reliance on debt relative to equity. This ratio then decreases to 15.59 in 2023 and remains relatively stable at 15.63 in 2024. No data is available for adjusted financial leverage, limiting further analysis in this regard. The high leverage ratios, particularly from 2021 onwards, suggest increased financial risk and potential pressure on the company’s capital structure.

The data reveals significant fluctuations in the reported stockholders’ equity of the company over the five-year period. Initially, reported stockholders’ equity decreased sharply from 9,409 million US dollars at the end of 2020 to 3,661 million US dollars by the end of 2022. Subsequently, there was a partial recovery in 2023 with reported equity rising to 6,232 million US dollars, followed by a slight decline to 5,877 million US dollars in 2024.

Contrastingly, the adjusted stockholders’ equity, likely accounting for goodwill and other adjustments, exhibits a consistently negative and worsening trend throughout the same period. It declined from -5,280 million US dollars at the end of 2020 to -12,760 million US dollars by the end of 2024, indicating increasing negative adjustments that significantly reduce the net asset base.

Analysis of the reported Return on Equity (ROE) shows extremely high and volatile values, with an increase from 77.2% in 2020 to a peak of 178.97% in 2022. This peak coincides with the period when reported stockholders’ equity was at its lowest, suggesting that lower equity values amplified reported ROE. Thereafter, the ROE declined to 107.78% in 2023 and further to 69.59% in 2024, aligning more closely with the restored, though still reduced, equity base. The adjusted ROE data is missing, preventing further analysis in that regard.

Key observations

The sharp decline and partial recovery in reported stockholders’ equity demonstrate significant fluctuations in the company’s net equity position over the period.

The continuously negative and deepening adjusted equity underscores the material impact of adjustments such as goodwill impairments that have progressively eroded the company’s underlying equity.

The reported ROE’s volatility, with exceptionally high peaks, indicates that returns on the equity base are heavily influenced by changes in book equity, which can distort profitability indications.

The absence of adjusted ROE data restricts assessment of profitability on a goodwill-adjusted basis, which would provide a more normalized measure.

Overall, the financial data points to substantial equity volatility and significant goodwill-related adjustments, which affect both the reported equity and profitability metrics. The pronounced volatility in reported ROE suggests caution in interpreting profitability solely on the reported basis, as it may be materially influenced by underlying equity fluctuations and accounting adjustments.

Total Assets

The reported total assets initially declined slightly from 62,948 million US dollars in 2020 to 61,165 million in 2021. This was followed by a moderate increase to 65,121 million in 2022. A more significant rise occurred in 2023, reaching 97,154 million, before decreasing to 91,839 million in 2024. The adjusted total assets show a similar but consistently lower trend, starting at 48,259 million in 2020, declining to 46,275 million in 2021, then increasing gradually to 49,592 million in 2022. A pronounced increase in 2023 brought adjusted assets to 78,525 million, with a subsequent decline to 73,202 million in 2024. Overall, both reported and adjusted total assets peaked in 2023 before declining in the following year.

Return on Assets (ROA)

The reported ROA shows a declining trend over the five-year period, decreasing from 11.54% in 2020 to 4.45% in 2024. The decline is somewhat gradual, with 2021 showing a drop to 9.63%, a slight recovery to 10.06% in 2022, followed by a sharper decline in 2023 and 2024. The adjusted ROA mirrored this pattern but at higher levels, starting at 15.05% in 2020, dropping to 12.73% in 2021, slightly increasing again to 13.21% in 2022, and then declining significantly to 8.55% in 2023 and further to 5.59% in 2024. This indicates that although asset returns adjusted for goodwill remain stronger than reported figures, profitability on assets has been weakening steadily since 2020.

Insights

The data indicates considerable fluctuation in asset base size, with a notable asset increase in 2023 followed by a reduction in 2024. This pattern is evident in both reported and adjusted figures, though goodwill adjustments consistently lower the total asset values. The steady decline in both reported and adjusted ROA suggests diminishing efficiency or profitability in asset utilization over the period. The sharper decline in ROA in recent years might reflect operational challenges or market conditions affecting overall returns despite the significant increase in assets in 2023.