Analysis of Debt
Total Debt (Carrying Amount)
Biogen Inc., balance sheet: debt
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The total carrying amount of notes payable exhibited relative stability from 2017 through 2019, followed by a significant increase in 2020 and a slight moderation in 2021. Total debt levels remained near 5.9 billion US dollars for the first three years of the period before rising to a peak of approximately 7.4 billion US dollars in 2020.
- Total Debt Trajectory
- Total notes payable remained virtually unchanged between December 31, 2017, and December 31, 2019, with a marginal increase from 5.938 billion US dollars to 5.955 billion US dollars. A sharp upward trend occurred in 2020, where total debt increased by approximately 24.8% to reach 7.426 billion US dollars. By December 31, 2021, a slight reduction was observed, with the total carrying amount decreasing to 7.273 billion US dollars.
- Debt Maturity Profile and Current Obligations
- The composition of debt shifted notably over the five-year period. In 2017 and 2018, the current portion of notes payable was negligible or absent, indicating that nearly all debt was long-term. However, in 2019, there was a significant reclassification or maturation of debt, with the current portion rising to 1.496 billion US dollars, representing approximately 25% of the total debt for that year. This pattern recurred in 2021, with current obligations totaling 999.1 million US dollars, or roughly 13.7% of the total carrying amount.
- Long-Term Debt Fluctuations
- Notes payable excluding the current portion showed volatility, particularly between 2019 and 2021. After remaining steady at approximately 5.9 billion US dollars in 2017 and 2018, long-term debt dropped to 4.459 billion US dollars in 2019. This was followed by a substantial increase to 7.426 billion US dollars in 2020, suggesting a significant new issuance of long-term debt, before declining to 6.274 billion US dollars by the end of 2021.
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Total Debt (Fair Value)
| Dec 31, 2021 | |
|---|---|
| Selected Financial Data (US$ in thousands) | |
| Total notes payable, including current portion (fair value) | 8,004,700) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 1.10 |
Based on: 10-K (reporting date: 2021-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on notes payable: 3.64%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 3.62% | 1,020,000) | 36,975) | |
| 4.05% | 1,895,200) | 76,756) | |
| 2.25% | 1,475,900) | 33,208) | |
| 5.20% | 1,463,000) | 76,076) | |
| 3.15% | 1,457,700) | 45,918) | |
| 3.25% | 692,900) | 22,519) | |
| Total | 8,004,700) | 291,451) | |
| 3.64% | |||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Weighted-average interest rate = 100 × 291,451 ÷ 8,004,700 = 3.64%
Interest Costs Incurred
Biogen Inc., interest costs incurred
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The total interest costs incurred between 2017 and 2021 exhibit a pattern of relative stability characterized by a slight mid-period dip followed by a steady increase. Total costs reached a minimum of US$ 254.6 million in 2018 before ascending to a five-year peak of US$ 289.9 million by December 31, 2021.
- Interest Expense Trends
- A U-shaped trajectory is observed in the interest expense. The expense decreased from US$ 250.8 million in 2017 to a period low of US$ 187.4 million in 2019. This downward trend reversed after 2019, with expenses climbing to US$ 253.6 million by 2021, effectively returning to the initial levels recorded at the start of the period.
- Capitalized Interest Costs
- Interest costs related to construction in progress demonstrated an inverse relationship with the interest expense from 2017 to 2019. These costs rose from US$ 30.7 million in 2017 to a peak of US$ 68.8 million in 2019, suggesting a period of intensified investment in long-term assets. Following this peak, capitalized costs declined consistently, falling to US$ 36.3 million by 2021.
- Composition of Interest Burden
- The allocation between expensed and capitalized interest shifted significantly over the analyzed timeframe. In 2019, the lowest point of interest expense coincided with the highest level of capitalization, indicating that a larger proportion of total interest costs was allocated to the balance sheet as assets. By 2021, the composition shifted back toward immediate expensing, as capitalized costs diminished and the interest expense rose.
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Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= 2,033,700 ÷ 253,600 = 8.02
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 2,033,700 ÷ 289,900 = 7.02
The analysis of interest coverage ratios reveals a non-linear trajectory characterized by an initial period of strengthening followed by a significant contraction between 2017 and 2021. Both measured ratios peaked in 2019 before experiencing a substantial decline, with the most acute reduction occurring in the final year of the observed period.
- Adjusted Interest Coverage Ratio (With Capitalized Interest)
- This metric exhibited a steady upward trend from 19.11 in 2017 to a peak of 28.24 in 2019. Subsequently, a downward trend emerged, with the ratio falling to 18.34 in 2020 and dropping sharply to 7.02 by December 31, 2021. This represents a significant decrease in the cushion available to cover interest expenses when capitalized interest is included.
- Interest Coverage Ratio (Without Capitalized Interest)
- The ratio excluding capitalized interest followed a similar pattern, rising from 21.45 in 2017 to a high of 38.60 in 2019. This was followed by a contraction to 23.71 in 2020 and a precipitous decline to 8.02 in 2021. The volatility in this ratio mirrors the trend seen in the adjusted figure, confirming a systemic reduction in coverage capacity toward the end of the period.
- Comparative Trend Analysis
- A consistent gap is observed between the two ratios, with the adjusted ratio remaining lower than the non-adjusted ratio in every reporting year. This indicates that capitalized interest consistently places an additional burden on the company's debt-servicing ability. Although both ratios remained above 1.0 throughout the period, the sharp decline in 2021 signifies a substantial erosion of the financial margin previously established during the 2017-2019 growth phase.
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