Amgen Inc. (NASDAQ:AMGN)

The provision for income taxes exhibited fluctuations over the five-year period. A review of the components reveals differing trends in the current provision and deferred benefit, ultimately impacting the total provision. The current provision generally increased from 2021 to 2023, before decreasing in 2024 and experiencing a modest increase in 2025. The deferred benefit consistently represented a negative value, indicating a reduction in tax expense, and remained relatively stable between 2021 and 2023, before decreasing significantly in 2025.

Current Provision

The current provision increased from US$1,242 million in 2021 to US$2,069 million in 2022, representing a substantial rise. This was followed by a further increase to US$2,353 million in 2023. A notable decrease occurred in 2024, with the current provision falling to US$1,757 million. The final year observed a slight increase to US$1,965 million in 2025. This suggests a correlation with underlying profitability, though further investigation would be required to confirm this relationship.

Deferred Benefit

The deferred benefit was consistently negative, indicating a deferred tax asset realization that reduced the overall tax expense. The benefit moved from -US$434 million in 2021 to -US$1,275 million in 2022, and then to -US$1,215 million in 2023. It remained at -US$1,238 million in 2024, before decreasing considerably to -US$700 million in 2025. The substantial decrease in the deferred benefit in 2025 warrants further scrutiny, potentially indicating changes in temporary differences or valuation allowances.

Total Provision for Income Taxes

The provision for income taxes began at US$808 million in 2021, decreased slightly to US$794 million in 2022, and then increased to US$1,138 million in 2023. A significant decline was observed in 2024, with the provision falling to US$519 million. The provision then increased to US$1,265 million in 2025. The overall trend is one of volatility, influenced by the offsetting movements in the current provision and deferred benefit. The decrease in 2024 is particularly noteworthy, likely driven by the combination of a lower current provision and a relatively stable deferred benefit.

The interplay between the current provision and deferred benefit significantly shapes the overall tax expense. The decrease in the deferred benefit in 2025, coupled with the increase in the current provision, contributed to the higher provision for income taxes observed in that year compared to 2024. Continued monitoring of these components is recommended to understand the underlying drivers of the tax expense and potential impacts on future financial performance.

The effective income tax rate exhibited fluctuations over the five-year period. While the federal statutory tax rate remained constant at 21.00%, the effective tax rate varied considerably, suggesting the influence of factors beyond the standard corporate tax rate.

Effective Tax Rate Trend

The effective tax rate decreased from 12.10% in 2021 to 10.80% in 2022, representing a decline of 1.30 percentage points. A subsequent increase was observed in 2023, with the rate rising to 14.50%. This was followed by a decrease to 11.30% in 2024, and a final increase to 14.10% in 2025.

The variations in the effective tax rate indicate that tax benefits, deductions, or credits, or changes in the geographic mix of earnings, are impacting the company’s overall tax burden. The largest single-year change occurred between 2022 and 2023, with an increase of 3.70 percentage points. The rate in 2025 is approximately 1.60 percentage points higher than the rate in 2021.

Deviation from Statutory Rate

Throughout the period, the effective tax rate consistently remained below the federal statutory rate of 21.00%. This suggests the company is benefiting from items that reduce its taxable income, such as research and development credits, foreign tax credits, or state tax benefits. The largest difference between the statutory and effective rates occurred in 2022, where the effective rate was 10.20 percentage points lower than the statutory rate.

Further investigation into the components of the tax expense would be necessary to determine the specific drivers behind these fluctuations and the sustainability of the lower effective tax rate relative to the statutory rate.

The composition of deferred tax assets and liabilities exhibits significant changes over the five-year period. Net deferred tax assets increased substantially, while deferred tax liabilities decreased, resulting in a considerable improvement in the net deferred tax position.

Net Deferred Tax Assets

Net deferred tax assets grew from US$1,668 million in 2021 to US$5,624 million in 2025. This growth was primarily driven by increases in deferred tax assets, partially offset by a growing valuation allowance. The valuation allowance against deferred tax assets increased consistently throughout the period, from US$663 million to US$1,299 million, suggesting increasing uncertainty regarding the realization of some of these assets.

Deferred Tax Asset Components

Net deferred tax assets are largely attributable to net operating loss (NOL) and credit carryforwards, which increased from US$1,065 million in 2021 to US$1,368 million in 2025, though with some fluctuation. Capitalized research and development expenses emerged as a significant component, rising dramatically from an initial absence in 2021 to US$1,655 million in 2025. Accrued expenses also contributed to the increase, growing from US$600 million to US$890 million. Earnings of foreign subsidiaries also became a substantial component, increasing from no value in 2021 to US$2,305 million in 2025. Stock-based compensation and other deferred tax assets also showed moderate increases.

Deferred Tax Liability Components

Deferred tax liabilities decreased from negative US$1,449 million in 2021 to negative US$3,238 million in 2025. This decrease was primarily driven by a reduction in liabilities related to acquired intangible assets, which fell from negative US$824 million to negative US$2,065 million. Liabilities related to debt remained relatively stable, decreasing slightly from negative US$275 million to negative US$260 million. Fixed asset related liabilities also decreased, from negative US$129 million to negative US$192 million. The fair value of acquired inventory and investments also contributed to the decrease in deferred tax liabilities, with both becoming more significant negative values over time. Other deferred tax liabilities also decreased.

Net Deferred Tax Position

The net deferred income taxes, representing the difference between net deferred tax assets and liabilities, increased significantly from US$219 million in 2021 to US$2,386 million in 2025. This indicates a strengthening financial position with respect to future tax obligations. The substantial increase in net deferred tax assets, coupled with the decrease in deferred tax liabilities, contributed to this positive trend.

Overall, the changes in deferred tax assets and liabilities suggest a shift in the company’s tax profile, potentially due to increased investment in research and development, acquisitions, and international operations. The increasing valuation allowance warrants continued monitoring to assess the realizability of deferred tax assets.

A significant increase in deferred tax assets is observed over the five-year period. Conversely, deferred tax liabilities initially appear in 2022 and then fluctuate before decreasing. The evolution of these balances suggests changes in the timing of recognizing income and expenses for tax versus financial reporting purposes.

Deferred Tax Assets

Deferred tax assets demonstrate a substantial growth trajectory. Beginning at US$219 million in 2021, the balance increased dramatically to US$954 million in 2022. This growth continued, reaching US$2,800 million in 2023, US$3,254 million in 2024, and culminating in US$3,752 million in 2025. This consistent increase indicates a growing expectation of future taxable income against which existing deductible temporary differences and carryforwards can be realized.

Deferred Tax Liabilities

Deferred tax liabilities were not present in 2021. They first appeared at US$11 million in 2022. The balance rose considerably to US$2,354 million in 2023, before decreasing to US$1,616 million in 2024 and further to US$1,366 million in 2025. This pattern suggests the recognition of taxable temporary differences, followed by a subsequent reduction, potentially due to reversals of those differences or changes in applicable tax laws.

The substantial growth in deferred tax assets, coupled with the initial emergence and subsequent fluctuation of deferred tax liabilities, warrants further investigation into the underlying temporary differences and their associated tax effects. The net deferred tax position (assets less liabilities) has increased significantly over the period, indicating a potential future reduction in tax expense, assuming the realization of the deferred tax assets.

The financial information reveals adjustments made to reported figures, primarily impacting stockholders’ equity and net income, likely due to the removal of deferred tax assets or liabilities. A consistent pattern emerges where adjusted values are lower than reported values across all balance sheet items and net income, indicating a reduction in reported financial strength upon these adjustments.

Total Assets

Reported total assets increased from $61,165 million in 2021 to $97,154 million in 2023, before decreasing to $90,586 million in 2025. The adjusted total assets follow a similar trend, though consistently lower than the reported figures, ranging from $60,946 million in 2021 to $86,834 million in 2025. The difference between reported and adjusted assets remains relatively stable in absolute terms, suggesting a consistent impact from the adjustments.

Total Liabilities

Reported total liabilities exhibited an increasing trend from $54,465 million in 2021 to $90,922 million in 2023, followed by a decline to $81,928 million in 2025. Adjusted total liabilities mirrored this pattern, remaining close to the reported values. The adjustment to liabilities is minimal compared to the adjustment to assets and equity.

Stockholders’ Equity

Reported stockholders’ equity experienced significant fluctuations, decreasing from $6,700 million in 2021 to $3,661 million in 2022, increasing to $6,232 million in 2023, and then rising to $8,658 million in 2025. The adjusted stockholders’ equity demonstrates a similar pattern but at lower levels, ranging from $6,481 million in 2021 to $6,272 million in 2025. The difference between reported and adjusted equity is more pronounced than the difference in assets or liabilities, indicating a substantial impact of the adjustments on the equity position.

Net Income

Reported net income increased from $5,893 million in 2021 to $6,717 million in 2023, then decreased significantly to $4,090 million in 2024, before recovering to $7,711 million in 2025. Adjusted net income follows a similar trajectory, but is consistently lower than the reported net income. The largest difference between reported and adjusted net income occurs in 2024, where the adjustment reduces net income by $1,238 million. This suggests a significant deferred tax expense or similar adjustment impacting profitability in that year.

Overall, the adjustments consistently reduce reported financial figures. The most significant impact is observed on stockholders’ equity and net income, suggesting the adjustments relate to items affecting owner’s claims and profitability, potentially stemming from changes in deferred tax valuations. The relatively small adjustment to liabilities indicates the primary impact is not related to direct liability revaluations.

The financial performance metrics demonstrate notable differences between reported and adjusted values following the removal of deferred tax impacts. Generally, the adjusted ratios reveal a more conservative financial picture, particularly concerning profitability and returns. A review of the period between 2021 and 2025 indicates fluctuating performance, with 2022 and 2024 representing periods of significant change.

Profitability

Reported net profit margin peaked in 2022 at 26.42% before declining substantially to 12.77% in 2024, then recovering to 21.94% in 2025. The adjusted net profit margin exhibits a similar pattern, though the magnitude of the decline in 2024 is more pronounced, falling to 8.91%. This suggests that deferred taxes were significantly boosting reported profitability in earlier periods, and their removal reveals a more volatile underlying profit trend. The difference between reported and adjusted margins widens during periods of lower reported profitability, indicating a greater reliance on deferred tax assets or liabilities in those years.

Asset Turnover

Both reported and adjusted total asset turnover ratios remain relatively stable throughout the period, fluctuating between 0.28 and 0.40. The adjusted ratio consistently shows a slightly lower value than the reported ratio, but the differences are minimal. This indicates that the removal of deferred taxes has a limited impact on the efficiency with which assets are used to generate revenue.

Financial Leverage

Reported financial leverage increased significantly from 9.13 in 2021 to 17.79 in 2022, then remained elevated at 15.59 and 15.63 in 2023 and 2024, before decreasing to 10.46 in 2025. The adjusted financial leverage mirrors this trend but consistently reports higher values, peaking at 23.61 in 2022 and remaining above the reported leverage throughout the period. This suggests that deferred taxes are masking the true extent of the company’s financial leverage, and the adjusted figures provide a more accurate representation of its debt obligations relative to equity.

Returns on Equity (ROE)

Reported ROE demonstrates substantial volatility, reaching a high of 178.97% in 2022 before falling to 69.59% in 2024 and recovering to 89.06% in 2025. The adjusted ROE also fluctuates, but remains consistently higher than the reported ROE, peaking at 194.15% in 2022 and ending at 111.78% in 2025. The difference between reported and adjusted ROE is most pronounced in 2022, indicating a significant impact from deferred taxes on reported equity returns. The adjusted ROE provides a more stable and potentially realistic view of equity performance.

Returns on Assets (ROA)

Reported ROA declined from 9.63% in 2021 to 4.45% in 2024, then increased to 8.51% in 2025. The adjusted ROA follows a similar trend, but consistently reports lower values, falling to 3.22% in 2024 and reaching 8.07% in 2025. The removal of deferred taxes results in a more conservative assessment of the company’s ability to generate profits from its assets. The gap between reported and adjusted ROA widens during periods of lower reported profitability, reinforcing the observation that deferred taxes are influencing reported performance.

In summary, the adjusted ratios, calculated after removing deferred tax effects, generally present a more subdued financial profile. The impact of deferred taxes is most evident in the profitability and returns metrics, where the adjusted figures reveal greater volatility and lower overall performance compared to the reported values. The asset turnover ratios are less affected by the adjustment, while financial leverage appears higher when deferred taxes are excluded.

The period under review demonstrates fluctuations in both reported and adjusted net income, consequently impacting associated profit margins. A general observation is that adjusted net profit margin exhibits greater volatility than reported net profit margin.

Adjusted Net Profit Margin Trend

The adjusted net profit margin decreased from 22.47% in 2021 to 21.28% in 2022, representing a modest decline. This downward trend continued into 2023, with the margin falling to 20.45%. A significant decrease was then observed in 2024, with the adjusted net profit margin reaching 8.91%, the lowest value within the observed period. A substantial recovery occurred in 2025, with the margin increasing to 19.95%, though it did not return to levels seen in 2021-2023.

Comparison with Reported Net Profit Margin

While reported net profit margin also experienced fluctuations, the declines were less pronounced than those observed in the adjusted net profit margin. Reported net profit margin peaked at 26.42% in 2022 before decreasing to 12.77% in 2024, and then recovering to 21.94% in 2025. The difference between reported and adjusted margins remained relatively consistent across the years, suggesting that adjustments consistently reduce the reported profitability.

Volatility and Potential Drivers

The substantial drop in adjusted net profit margin in 2024, followed by a recovery in 2025, indicates a significant event or series of events impacting profitability during that period. The magnitude of the change suggests that the adjustments made to net income had a considerable effect in 2024. Further investigation into the nature of these adjustments would be necessary to understand the underlying drivers of this volatility.

In summary, the adjusted net profit margin demonstrates a pattern of decline followed by recovery, with a particularly notable decrease in 2024. The adjusted margin consistently lags behind the reported margin, indicating the impact of specific adjustments to net income. The observed trends warrant further investigation to determine the factors influencing these fluctuations.

The analysis reveals trends in reported and adjusted total assets, alongside their corresponding turnover ratios, over a five-year period. Reported total assets increased from 2021 to 2023, experienced a decline in 2024, and continued to decrease slightly in 2025. Adjusted total assets mirrored this pattern, with a similar increase through 2023, followed by declines in 2024 and 2025.

Reported Total Asset Turnover

The reported total asset turnover ratio exhibited a decrease from 0.40 in 2021 to 0.28 in 2023. A slight recovery was observed in 2024, with the ratio increasing to 0.35, and further improvement occurred in 2025, reaching 0.39. This suggests a fluctuating efficiency in generating sales relative to reported total assets.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio followed a similar trajectory to the reported ratio. It decreased from 0.40 in 2021 to 0.29 in 2023, then increased to 0.36 in 2024, and reached 0.40 in 2025, returning to the initial level observed in 2021. The adjusted ratio consistently remained at the same level as the reported ratio throughout the period.

The convergence of the reported and adjusted total asset turnover ratios indicates that the adjustments made to total assets did not materially impact the turnover calculation. The period between 2021 and 2023 demonstrates a declining trend in asset utilization, while the subsequent years show a recovery towards the initial efficiency level. The increase in turnover in 2024 and 2025 may warrant further investigation to determine the underlying drivers of this improvement.

An examination of the financial information reveals trends in both reported and adjusted financial leverage over the five-year period. Reported total assets increased significantly from 2021 to 2023, then decreased slightly in 2024 and 2025. Adjusted total assets followed a similar pattern. Stockholders’ equity experienced a substantial decline between 2021 and 2022, followed by recovery and growth through 2025, though adjusted stockholders’ equity showed a more pronounced initial decrease and a slower recovery.

Reported Financial Leverage

Reported financial leverage increased substantially from 9.13 in 2021 to 17.79 in 2022, indicating a greater proportion of assets financed by equity holders. It remained relatively high at 15.59 and 15.63 in 2023 and 2024, respectively, before decreasing to 10.46 in 2025. This final decrease suggests a reduction in the reliance on equity financing relative to assets.

Adjusted Financial Leverage

Adjusted financial leverage exhibited a more dramatic increase than its reported counterpart, rising from 9.40 in 2021 to 23.61 in 2022. This suggests that adjustments to the asset or equity base resulted in a more significant increase in leverage than indicated by the reported figures. Adjusted financial leverage remained elevated at 16.31 and 20.90 in 2023 and 2024, respectively, before declining to 13.84 in 2025. The decrease in 2025 mirrors the trend observed in reported financial leverage, but the adjusted ratio remains higher than the reported ratio throughout the period.

The divergence between reported and adjusted financial leverage suggests that the adjustments made to total assets and stockholders’ equity have a material impact on the calculated leverage ratios. The substantial increase in adjusted financial leverage in 2022, exceeding the reported increase, warrants further investigation into the nature of these adjustments. The subsequent declines in both reported and adjusted leverage in 2025 indicate a potential shift in the company’s capital structure or asset base.

Equity Trends

The significant drop in both reported and adjusted stockholders’ equity in 2022 is a key observation. While equity recovered in subsequent years, the adjusted equity remained consistently lower than the reported equity, indicating that the adjustments systematically reduce the equity base. This difference could be due to factors such as accumulated other comprehensive income, intangible assets, or other balance sheet items subject to adjustment.

Overall, the financial leverage ratios indicate a period of increased risk between 2021 and 2024, followed by a moderation of that risk in 2025. The adjustments to the financial statements appear to amplify the changes in leverage, highlighting the importance of understanding the underlying reasons for these adjustments when assessing the company’s financial risk profile.

The period between 2021 and 2025 demonstrates considerable fluctuation in both reported and adjusted net income, as well as stockholders’ equity. Consequently, both reported and adjusted return on equity (ROE) exhibit significant volatility. A detailed examination of these trends is presented below.

Reported Net Income & ROE

Reported net income increased from US$5,893 million in 2021 to US$6,552 million in 2022, followed by a slight increase to US$6,717 million in 2023. A substantial decrease was then observed in 2024, with reported net income falling to US$4,090 million, before recovering strongly to US$7,711 million in 2025. This income pattern directly influences the reported ROE, which peaked at 178.97% in 2022, decreased to 69.59% in 2024, and rebounded to 89.06% in 2025. The volatility in reported ROE is largely attributable to the swings in reported net income combined with fluctuations in reported stockholders’ equity.

Adjusted Net Income & ROE

Adjusted net income shows a different pattern. It decreased from US$5,459 million in 2021 to US$5,277 million in 2022, then increased slightly to US$5,502 million in 2023. Similar to the reported figures, 2024 saw a significant decline to US$2,852 million, followed by a substantial recovery to US$7,011 million in 2025. The adjusted ROE mirrors this trend, reaching a high of 194.15% in 2022, dropping to 67.28% in 2024, and rising to 111.78% in 2025. The adjusted ROE generally remains slightly higher than the reported ROE throughout the period.

Stockholders’ Equity

Reported stockholders’ equity experienced a significant decrease from US$6,700 million in 2021 to US$3,661 million in 2022. It then increased to US$6,232 million in 2023, followed by a slight decrease to US$5,877 million in 2024, and a substantial increase to US$8,658 million in 2025. Adjusted stockholders’ equity follows a similar pattern, decreasing from US$6,481 million in 2021 to US$2,718 million in 2022, increasing to US$5,786 million in 2023, decreasing to US$4,239 million in 2024, and increasing to US$6,272 million in 2025. The fluctuations in stockholders’ equity contribute to the observed volatility in both reported and adjusted ROE.

ROE Discrepancy

The difference between reported and adjusted ROE is relatively small across all years, generally within a range of 2-10 percentage points. This suggests that the adjustments made to net income and stockholders’ equity have a consistent, but not drastic, impact on the calculated ROE. The largest difference is observed in 2022, where adjusted ROE exceeds reported ROE by approximately 15 percentage points.

In summary, the period is characterized by substantial volatility in net income and stockholders’ equity, leading to corresponding fluctuations in both reported and adjusted ROE. The adjusted ROE consistently remains slightly higher than the reported ROE, indicating the impact of adjustments to reported figures. The significant recovery in both net income and ROE in 2025 suggests a potential positive shift in financial performance.

The period under review demonstrates fluctuating performance in both reported and adjusted return on assets (ROA). Reported net income exhibits volatility, increasing from 2021 to 2022, remaining relatively stable in 2023, decreasing significantly in 2024, and then rebounding strongly in 2025. A similar pattern is observed in adjusted net income, though the magnitude of the decrease in 2024 is more pronounced. Total assets, both reported and adjusted, generally increased from 2021 to 2023, followed by a decrease in 2024 and a further, albeit smaller, decrease in 2025.

Reported Return on Assets (ROA)

Reported ROA increased from 9.63% in 2021 to 10.06% in 2022, indicating improved profitability relative to assets. However, a substantial decline occurred in 2023, with ROA falling to 6.91%, and this downward trend continued in 2024, reaching 4.45%. A significant recovery is then evident in 2025, with reported ROA rising to 8.51%. This suggests a strong correlation between net income fluctuations and reported ROA.

Adjusted Return on Assets (ROA)

Adjusted ROA mirrors the trend observed in reported ROA, though at lower percentages. It decreased from 8.96% in 2021 to 8.22% in 2022, then declined further to 5.83% in 2023. The most significant decrease is seen in 2024, with adjusted ROA falling to 3.22%. Similar to the reported ROA, a substantial increase is observed in 2025, reaching 8.07%. The consistent pattern between reported and adjusted ROA suggests that the adjustments made to net income and total assets do not fundamentally alter the overall profitability trend.

The considerable drop in both reported and adjusted ROA in 2024 warrants further investigation. While the subsequent recovery in 2025 is positive, understanding the factors contributing to the 2024 decline is crucial. The increases in total assets in 2022 and 2023 did not translate into proportional increases in profitability, and the subsequent asset reductions in 2024 and 2025 did not prevent the initial decline in ROA. The relationship between asset management and profitability should be examined to determine if asset utilization efficiency played a role in the observed trends.

Relationship between Reported and Adjusted ROA

The difference between reported and adjusted ROA remains relatively consistent across the period, suggesting that the adjustments applied are systematic and do not represent drastic changes in the underlying economic reality. The close tracking of the two ROA metrics indicates that the adjustments are not masking significant discrepancies in performance.